RBI Governor Confirms India's Forex Reserves Adequate for 11+ Months of Imports

As on May 30, India's foreign exchange reserves were $691.5 billion, which would be able to cover over 11 months of merchandise imports and almost 96 percent of the nation's external debt, RBI Governor Sanjay Malhotra informed on Friday.

The week ended May 30 recorded a decrease of $1.2 billion in reserves after the consecutive eight-week growth ended. The reserves had recorded a massive increase of $6.99 billion during the last week and had reached $692.72 billion as of May 23.

Movement in foreign currency assets, as per dollar terms, is the reason behind appreciation or depreciation of other currencies in the reserves.

There has also been a sharp increase in net inflows from non-resident deposits and external commercial borrowings (ECBs) over last year.

Governor Malhotra said, "Overall, India's external sector is robust as major external sector vulnerability indicators continue to show improvement. We are confident of meeting our external financing needs."

The latest data from the RBI shows that India’s foreign currency assets—the largest portion of the reserves—stood at $586.167 billion. The central bank updates foreign exchange reserve figures weekly on Fridays.

India’s forex reserves remain close to their record high of $704.89 billion, reached in September 2024, having grown by over $20 billion during the year so far.

In the midst of geopolitical uncertainties, global central banks are increasing their gold reserves as a safe-haven asset. India's gold reserves stand at $83.582 billion, with the RBI almost doubling the gold component of its reserves since 2021.

A greater forex reserve position strengthens the rupee against the US dollar.

Increase in foreign exchange reserves reflects strong economic fundamentals and gives the RBI more elbow room to stabilize the rupee when it is volatile.

A sufficiently replenished forex kitty allows the RBI to effectively intervene in the forward and spot currency markets by providing dollars to ward off rupee sharpness.

In the area of trade, India's external sector has picked up, with overall goods and services exports increasing by 12.7 percent to $73.8 billion in April compared to $65.48 billion in the same month last year, despite global economic instability brought about by US tariffs, ministry data showed.